2015 mid-year real estate update

WHERE REAL ESTATE IS MOVING WHERE REAL ESTATE IS MOVING

2015 Mid-Year Real Estate Update Rick Sharga Executive Vice President May 20, 2015

What We’ll Cover Today

•  Existing and New Home Sales Trends

•  Delinquencies and Foreclosures

•  Investor Activity

•  Commercial Real Estate Trends

•  Closing Thoughts

•  Q & A

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WHERE REAL ESTATE IS MOVING

Existing & New Home Trends

Existing Home Sales Weaker Than Forecast

Prices Continue to Increase, But Rate of Growth Slowing

Low Inventory Driving Price Gains

New Home Sales Improving, Still Far Off Peak Levels

New Home Inventory Still Near 40-year Low

Housing Starts Continue to Lag

And Are Still Skewed Toward Multifamily

WHERE REAL ESTATE IS MOVING

Foreclosures: The End is (Finally) Near

Delinquent Loan Backlog is Shrinking

And US Foreclosure Activity Decreasing Rapidly

Majority of Loans in Foreclosure are Pre-2010 Vintage

And 77% of Delinquent Borrowers are Underwater

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But Negative Equity Trends are Improving

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And Largely Concentrated in a Few States

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WHERE REAL ESTATE IS MOVING

Investor Activity

Investor Purchase Prices Moderating in All Regions

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Price to Appraisal Ratio Moderating – Lowest Since Q4 2010

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Price-to-Appraisal Ratio Declining in Most Metros

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Most Live Event Investors Choose to Flip Properties

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While Most Online Investors Prefer Holding to Rent

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South & West Regions Offer Best Investing Prospects

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Top 5 Hottest Metro Areas in the US

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WHERE REAL ESTATE IS MOVING

Commercial Market Overview

Commercial Sales at Highest Levels Since Recession

And Prices Continue to Rise in All Sectors

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Risk Premiums May be Nearing Cyclical Peak

And Cap Rates Fall Below 10-Year Averages

WHERE REAL ESTATE IS MOVING

Closing Thoughts

What’s in Store for the Rest of 2015

•  Residential market may show marginal improvements over 2014:

»  Existing home sales between 4.9-5.1 million units

»  Existing home prices appreciate between 4.5 - 5.5%

»  Access to credit still tight, and interest rates likely to increase slightly

•  New home sales will improve slightly as well

»  Sales between 450,000 – 500,000 units

»  Unlikely to see much entry level inventory

•  Foreclosure activity nearing pre-crisis levels

•  Commercial recovery outpacing residential

»  Capital ahead of fundamentals in some markets/sectors

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WHERE REAL ESTATE IS MOVING

Rick Sharga Executive Vice President Auction.com rsharga@auction.com Follow me on Twitter: @ricksharga